by Calculated Risk on 12/12/2010 05:35:00 PM

The FOMC meets on Tuesday, and this will probably be a boring statement - and therefore this is a boring preview!

Perhaps the FOMC will use the statement to defend their decision to launch "QE2" in November. But it is very unlikely there will be any change to FOMC policy, and there will probably be no material change to the statement.

I expect:
• The target range for the federal funds rate to remain at 0 to 1/4 percent
• The policy of reinvestment of principal payments to remain
• and for no change to the plan to purchase an additional $600 billion of longer-term Treasury securities by the end of June 2011.

For the FOMC statement, I expect the key sentence "likely to warrant exceptionally low levels for the federal funds rate for an extended period" to remain, and even though there has been some improvement in the recent economics news, the first paragraph will probably be about the same. The following is from the Nov 3rd statement:

Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.

Change "September" to "November" and nothing has changed.

• Kansas City Fed President Thomas Hoenig will cast his last no vote. The regional Fed presidents rotate on the FOMC, and Hoenig will not be a voting member of the FOMC next year (edit: he will be an alternate member).

Earlier:
• Here is the busy economic schedule for the coming week.
• Here is the Summary of last week